Fhenix Manifesto:
Building the future of private DeFi with FHE

Fhenix FAQ:
Everything You Need to Know About FHE-Powered Blockchain Privacy

A comprehensive guide to understanding Fhenix, Fully Homomorphic Encryption, and the future of confidential computing on blockchain

What is Fhenix?

Fhenix is a blockchain research and development company building privacy-focused solutions using FHE for EVM-compatible blockchains. Originally launched as the first FHE-powered Layer 2 blockchain, Fhenix has evolved into a confidential DeFi infrastructure company with core products including CoFHE (our FHE Coprocessor) and other upcoming privacy-preserving tools.

The company uses FHE to enable computation directly on encrypted data, meaning sensitive information can remain confidential while still being processed without ever needing decryption on-chain.

Fhenix's infrastructure includes Solidity libraries for encrypted variables and their dedicated FHE Coprocessor that processes encrypted data off-chain to address computational complexity while keeping the developer experience seamless. The platform's modular design allows confidential data handling at all levels, and developers don't need deep cryptographic knowledge to utilize its privacy features.

The company's mission is to make encrypted computation native and accessible to Web3 developers, advancing data privacy and usable confidentiality in public blockchains.

What is FHE?

FHE is an advanced cryptographic technique that allows computations—such as addition, multiplication, and complex operations—to be performed directly on encrypted data (ciphertext) without ever needing to decrypt it first. The results of these computations also remain encrypted, and when finally decrypted by an authorized party, the output matches exactly what would have been produced if the operations were performed on the original, unencrypted data.

FHE enables arbitrary computations on encrypted data, supporting both addition and multiplication operations, which means any program can theoretically be executed while the data stays protected. Data remains encrypted at all times—at rest, in transit, and especially during processing—ensuring end-to-end privacy. There's no need for the party performing computations (such as a cloud provider) to possess the secret decryption key, protecting sensitive information even in untrusted environments.

FHE is widely regarded as the "holy grail" of cryptography because it enables computation on data without exposing it, unlocking possibilities for privacy-preserving applications in cloud computing, finance, healthcare, and blockchain.

FHE relies on complex mathematical problems, commonly based on lattice-based cryptography, and is considered resistant to attacks even from quantum computers. While FHE remains computationally intensive compared to traditional encryption, we are making it increasingly practical for real-world applications.

How does Fhenix solve blockchain privacy issues?

Fhenix leverages FHE to enable confidential computation and data protection directly on public blockchains. Traditional blockchains like Ethereum record all transactions, wallet balances, and smart contract states in a fully transparent way. This severe privacy limitation prevents sensitive applications like confidential financial trades, private auctions, and secure personal data storage from adopting blockchain technology at scale.

Developers can create Ethereum-compatible smart contracts where inputs, states, and outputs are encrypted, with contract logic operating on hidden values. The system offers user-friendly integration through Solidity libraries and EVM compatibility, allowing Web3 developers to implement privacy features without deep cryptographic expertise. An FHE Coprocessor offloads heavy encrypted computations while keeping the interaction seamless for users and applications.

What is CoFHE?

The FHE Coprocessor (CoFHE) from Fhenix is an off-chain computation layer purpose-built to process encrypted data using FHE, enabling privacy-first smart contracts and confidential transactions on EVM-compatible blockchains.

CoFHE's core function is to offload the most computationally intensive cryptographic operations—such as running FHE-powered computations—away from the main blockchain (Ethereum, L2s, or L3s) and execute them in a secure, external processing layer. This dramatically increases efficiency and scalability for encrypted transactions while maintaining the security and privacy guarantees of FHE.

The developer experience is designed to be seamless—developers can enable encrypted computation in their smart contracts with a single line of code while retaining Solidity and EVM compatibility. Data stays encrypted throughout the computation process, and only authorized users can decrypt results. The blockchain witnesses only encrypted payloads and cryptographic proofs, never raw data.

CoFHE enables real-time confidential computation and boasts decryption speeds up to 50 times faster than competing approaches, with low on-chain gas costs due to offloading heavy processing off-chain. The process flow begins when smart contracts emit an event indicating FHE computation is needed. This event is detected and routed to CoFHE's FHE processing engine, which performs the computation on encrypted data. If decryption is required, a dedicated Threshold Decryption Network securely reveals the output only to authorized parties.

The coprocessor maintains security and verifiability without maintaining blockchain state, secured through mechanisms like optimistic rollups and economic staking with EigenLayer, ensuring computation correctness is verifiable on-chain and resistant to manipulation.

Is Fhenix EVM-compatible?

Yes, Fhenix is fully EVM-compatible, allowing confidential smart contracts to be developed and deployed on any Ethereum Virtual Machine (EVM)-compatible blockchain.

CoFHE acts as an off-chain computation layer that seamlessly handles intensive FHE operations, and developers can enable encrypted computation in their smart contracts with minimal changes—often just a single Solidity import. Smart contracts on Fhenix are written in standard Solidity, and the code remains in plaintext on-chain, maintaining standard EVM verification and compatibility for developers and users.

CoFHE is currently live on Ethereum mainnet and Arbitrum, as well as testnets like Arbitrum Sepolia.

Fhenix extends the EVM with confidential compute capabilities while preserving the developer experience and interoperability of the broader Ethereum ecosystem, making it possible to add privacy features to existing applications without requiring developers to learn new programming languages or frameworks.

What's Fhenix's relationship with Arbitrum?

Fhenix has a strategic partnership and close working relationship with Arbitrum (developed by Offchain Labs) to bring private computation to the Ethereum ecosystem, leveraging Arbitrum as a Layer 2 solution for scalable FHE deployment.

The collaboration includes both investment and technical integration. Tandem, the partner studio and venture capital arm of Offchain Labs (the team behind Arbitrum), has made a strategic investment in Fhenix to integrate FHE into the blockchain ecosystem, including Arbitrum's Layer 2 network.

CoFHE, our FHE-powered coprocessor, is live on Arbitrum and enabes developers to write privacy-preserving smart contracts using standard EVM tools with a single line of Solidity code.

This unlocks privacy-centric applications such as private DeFi, confidential DAOs, encrypted identity frameworks, and more, while maintaining decentralization and composability.

Is Fhenix VC backed?

Fhenix has raised over $22 million in total from leading Web3 investors and venture capital firms specializing in blockchain and privacy technology.

The company completed a $15 million Series A funding round led by Hack VC, with participation from Amber Group, Collider Ventures, Primitive Ventures, GSR, Stake Capital, and Dao5, among others. Prior to this, Fhenix raised a $7 million seed round from investors including Multicoin Capital and Collider Ventures, with participation from Node Capital, Bankless, HackVC, Robot Ventures, MH Ventures, NGC Ventures, and Gate.io.

Additionally, Fhenix received strategic investment from Tandem, the venture arm of Offchain Labs (developers of Arbitrum), specifically to integrate Fully Homomorphic Encryption into the blockchain ecosystem and support the technical partnership between Fhenix and Arbitrum.

What applications can be built on Fhenix?

In financial services and DeFi, Fhenix enables confidential transactions where payments, financial trades, and token transfers keep transaction details encrypted and private. On-chain auctions can operate with private bids and sealed auction mechanisms, including DeFi liquidations and token sales that protect bidder identities and bid values. The platform supports confidential voting for privacy-preserving governance where votes and voter identities remain secret, ensuring fair and regulatory-compliant elections.

For gaming and entertainment, Fhenix allows encrypted gaming where player data, state updates, strategies, and in-game transactions are hidden on-chain, preventing cheating and reverse engineering while maintaining the benefits of blockchain-based gaming assets and mechanics.

The platform enables decentralized identity solutions with user-controlled encrypted identity attributes, enhancing privacy while maintaining trustworthiness and verifiability. MEV protection becomes possible through encryption of mempool transactions to prevent front-running and ensure fairness in transaction ordering.

Privacy-preserving AI represents another significant use case, enabling secure on-chain training and execution of AI models on sensitive data without revealing raw information. DeFi applications can implement private trading, lending, confidential DAOs, and other financial applications requiring secrecy of user positions and strategies.

Sensitive data management becomes feasible for healthcare records, corporate secrets, and personal data within smart contracts, enabling blockchain adoption in regulated industries that previously couldn't use public blockchain technology due to privacy requirements.

These applications are enabled by Fhenix's integration of FHE with EVM-compatible smart contracts, allowing encrypted computation with standard Solidity coding practices while offloading heavy cryptographic work via the CoFHE coprocessor.

How fast is Fhenix's encryption?

CoFHE enables real-time confidential computation with decryption speeds reported to be up to 50 times faster than current competitor benchmarks in the FHE space.

This dramatic performance improvement makes Fhenix's FHE-based encryption practical for blockchain applications, supporting encrypted computations on smart contracts with low latency and minimal gas costs.

The architecture achieves these speed improvements by offloading heavy cryptographic operations off-chain through the CoFHE coprocessor, enabling efficient encrypted data processing while maintaining privacy guarantees and full EVM compatibility.

When will Fhenix be available?

Fhenix is currently in its testnet phase, with the "Helium" public testnet launched in mid-2024 to allow developers to deploy smart contracts and experiment with confidential computation on-chain. This testnet phase enables developers to build and test privacy-preserving applications using Fhenix's FHE technology before mainnet deployment.

CoFHE, Fhenix's FHE Coprocessor, has gone live on Arbitrum marking the first practical implementation of FHE. More information can be found below.

https://cofhe-docs.fhenix.zone/

For the latest updates on Fhenix availability and mainnet launch timeline, visit fhenix.io or follow their official channels for development progress and release announcements.